Proposal to transfer CGU insurance licence
October 28, 2016
The project will commence in mid April and focus on improving building resilience to severe weather so that customers can receive sustainable premium reductions.
CGU’s wholly-owned subsidiary Strata Unit Underwriters (SUU), which currently insures a substantial number of residential strata properties in North Queensland, will oversee its implementation.
CGU Chief Executive Officer Peter Harmer said; “We understand and empathise with the needs and interests of our customers and North Queensland communities, and we are committed to addressing the concerns they have raised about insurance affordability.”
“Our project is an important step forward in addressing this issue. I note the Federal Government’s concerns about the cost of insurance in North Queensland. CGU is committed to working together with governments and communities to address this important issue.”
Under the project CGU will fund building risk assessments to be undertaken by Sergon, a specialist building consultant, across all of the residential strata properties SUU and CGU insure in North Queensland. The assessments will cover risks such as building construction type and method, exposure to direct wind-driven rain, as well as other hazards and possible defects.
Following completion of each assessment, CGU will revisit its pricing, with a view to reducing premiums where possible.
Recommendations from the assessments will be provided to strata property owners and managers on repairs that could be made to improve the property’s resilience and risk rating, enabling the properties to potentially be re-rated so that customers receive sustainable premium discounts.
Should the body corporate wish to have the remedial works carried out, SUU could facilitate a detailed quote either through the building manager’s preferred trades people or local businesses.
Until the surveys are completed, it is difficult for CGU to estimate the size of potential premium reductions. Early stage high-level calculations suggest individual premium reductions could be up to 25 per cent.
The project is part of a broader approach by Insurance Australia Group (IAG) — CGU’s parent company — which focuses on insurance industry leadership, and creating safer, more resilient communities.
Mr Harmer said there was potential for the project to be developed further. “We are exploring options to further assist policy holders, so that the repairs can be undertaken at the earliest opportunity and our customers can experience the full benefits of this work”.
To offset possible funding challenges, SUU has commenced discussions with a major financial institution to facilitate access to finance for body corporates wishing to make the recommended repairs.
CGU hopes the project will further embed sustainable pricing focused on risk as well as having important spin offs for human safety from flying debris, and improved property values. CGU has offered to share the findings of the building assessments with government, councils and other interested stakeholders, to improve knowledge and awareness of building codes, materials, and other mitigation, which all impact on insurance premiums.
CGU is also in discussions with the Insurance Council of Australia (ICA) about how the project can complement the James Cook University initiative on strata building assessment methodologies.